Save Big on Your Mortgage
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Making regular additional payments toward the principal yields huge returns. Borrowers use different methods to meet this goal. Paying a single additional full payment one time per year may be the easiest to keep track of. But many people won't be able to swing such a large additional payment, so splitting an additional payment into twelve additional monthly payments works too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment each year. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
One-time Additional Payment
Some folks just can't make extra payments. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you get some extra money, you can use this provision to make an additional one-time payment on your mortgage principal.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could apply this money toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even this modest amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.
At Omni Mortgage Corp., we answer questions about interest-saving strategies almost every day. Give us a call: 718-441-7000.